The present invention relates generally to an investment program which includes a system and a method for collecting, monitoring and directing data from Benefit Plan participants and beneficiaries ("participants"), Benefit Plan sponsors and fund managers and, more particularly, to a data processing system that collects, monitors and directs information from Benefit Plan participants, sponsors and fund managers, to provide professional investment advice to Benefit Plan participants while eliminating the inherent economic conflict of interest in traditional Benefit Plan programs.
The field of retirement savings has been greatly impacted by the vigorous growth of corporate Benefit Plans that offer individual accounts, allowing each participant to direct the investment of the assets allocated to his or her individual account. This practice of allowing each individual participant to manage his or her account has resulted in a need to provide investment advice to a large number of employees, heretofore unfamiliar with even the basics of investment portfolio management.
The entities most capable of providing such investment advice are the same entities that traditionally manage the investments of the commingled funds normally offered in Benefit Plans. Such investment managers receive most (if not all) of their compensation as a percentage of assets managed, with such percentages varying according to the nature of the risk associated with the commingled fund managed. For example an international equity fund would pay a manager a higher percentage resulting in a higher net profit than a domestic bond fund manager for funds having approximately the same assets under management.
Prior contemplated approaches to providing investment advice to Benefit Plan participants has a built in economic conflict of interest because the investment advisor traditionally receives higher net profits from some of the commingled funds provided versus others. This situation could lead to investment managerswho are also acting in the capacity of investment advisors consciously or subconsciously recommending or investing in funds that provide the investment advisor with a higher income, a situation possibly not in the best interest of the individual Benefit Plan participant.
Thus, there is a need for an investment program that eliminates this economic conflict of interest by separating the investment advice entity from the investment management entity. Such a system should provide compensation for investment advice totally independent of the investment management entity; should provide investment advice totally independent from and unrelated to the commingled Trust investment manager and should insure that the Trust investment manager has access only to the aggregate investment of each Benefit Plan and not by individual participants.